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Nvidia’s AI chips are facing competition from AMD and Intel.
Dreamstime
Nvidia
has established a leading position in artificial-intelligence semiconductors which has sent its stock roaring this year.
Citi
analysts are backing the stock to go further, boosted by increasing data-center investment and its advantages over would-be competitors.
The Citi analysts raised their target price on
Nvidia
(ticker: NVDA) to $520 from $420 previously, maintaining a Buy rating. They said that was based on a projected price-to-earnings multiple of 35 times for 2025, with a bull case of $600 at a price-to-earnings multiple of 40.
Nvidia shares were up 0.7% in premarket trading at $457.70. Its shares have more than tripled in value in 2023 so far.
“We continue to see favorable risk-reward on accelerating Y/Y [year-over-year] data center sales through the year,” the Citi analysts wrote.
The analysts are backing the stock despite some risks, including tighter U.S. restrictions on exports to China and future competition.
Nvidia has emerged as the unquestioned leader in AI chips due to its specialism in graphics-processing units, or GPUs, but rivals such as
Advanced Micro Devices
(AMD) are also aiming to take advantage of a multibillion-dollar opportunity in providing chips to customers looking for potential alternatives.
Nvidia’s dominance is set to continue based on the advantage it has in optimizing software for GPU computations, its networking portfolio and superior hardware, according to Citi.
The Citi analysts said they expect Nvidia to maintain a substantial advantage over AMD in AI performance and keep a market share of around 90% in the market for AI-related graphics-processing units for the next two-to-three years, which they expect to hit $150 billion in 2027.
Write to Adam Clark at [email protected]
Source: https://www.barrons.com/articles/nvidia-stock-ai-chips-amd-864f912b?siteid=yhoof2&yptr=yahoo